For this episode of Art of the Kickstart, we caught up with Graeme and Alex of The 5TH SWISS. Tune in to learn more about how they built their initial brand and following online, developed a prestigious, high-quality product for a fraction of the price, and utilized Kickstarter for testing in today’s millennial market.
Topics Discussed and Key Crowdfunding Takeaways
- Implementing a pre-order, limited-release strategy to build their business before crowdfunding
- How they approached taking a mature, “old-age” product and developing it for today’s millennial market
- Utilizing the strategies of the direct-to-consumer model for a legacy product
- Applying Kickstarter backer feedback to the future plans of their business
- What they took into consideration when determining the best crowdfunding agency for their needs
Art of the Kickstart is honored to be sponsored by The Gadget Flow, a product discovery platform that helps you discover, save, and buy awesome products. The Gadget Flow is the ultimate buyer’s guide for cool luxury gadgets and creative gifts. Click here to learn more and list your product – use coupon code ATOKK16 for 20% off!
Art of the Kickstart is honored to be sponsored by BackerKit. BackerKit makes software that crowdfunding project creators use to survey backers, organize data, raise additional funds with add-ons and manage orders for fulfillment, saving creators hundreds of hours. To learn more and get started, click here.
Roy Morejon: Welcome to Art of the Kickstart, your source for crowdfunding campaign success. I’m your host, Roy Morejon, president of Enventys Partners, the top full service turnkey product development and crowdfunding marketing agency in the world. We have helped startups raise over a $100 million for our clients since 2010. Each week, I’ll interview a crowdfunding success story, an inspirational entrepreneur, or a business expert in order to help you take your startup to the next level with crowdfunding.
Roy Morejon: Art of the Kickstart is honored to be sponsored by BackerKit and The Gadget Flow. BackerKit makes software that crowdfunding project creators use to survey backers, organize data, and manage orders for fulfillment by automating your operations and helping you print and ship faster. The Gadget Flow is a product discovery platform that helps you discover, save, and buy awesome products. It is the ultimate buyer’s guide for luxury gadgets and creative gifts. Now, let’s get on with the show.
Roy Morejon: Welcome to another edition of Art of the Kickstart. Today I am joined with Graeme and Alex from The Fifth. Graeme, Alex, thank you so much for joining us today.
Alex: Thank you for having us.
Graeme : Thanks Roy.
Roy Morejon: I’m really excited to start this interview with the story and where the inspiration to create this company came back in 2014. If you would, let’s go through the journey that you’ve taken thus far.
Alex: Yeah, well it’s been a really interesting journey. We started in 2014, and in many respects we had a dream, kind of started the business. We sold a thousand watches on day one of release and we sold out of production, which led to a problem of, you know, we weren’t able to supply customers for about three and a half months. What we did was we came up with a concept where we presold on the fifth of every month. Every fifth of the month, we would restock our watches and they were all preorder, customers could get them.
Alex: What we saw was that that release mentality and kind of dropping things on the fifth of every month, that excitement generated a lot of demand for the product. We saw, you know, a really rapid growth in the business. We generated a large customer base, and we went on quite a journey with the business that kind of, in many ways, we launched our watches, we launched bags, we launched sunglasses and we kind of, we went with the energy of the business. It was a fast paced environment and kind of, here we are again today, you know, about to release something that’s really exciting, something that’s new and we’re here to do it on Kickstarter to an entire new audience.
Roy Morejon: So, we’re on the 16th of September and we’re launching a new watch, the Fifth Swiss. Let’s talk about the process of creating and designing new features, new watches. You know, you have five new designs that are launching today on Kickstarter. Talk about the process there from the evolution of new ideas that you guys come up with and designs.
Alex: Sure. We’ve actually got five collections, but 75 watches in total, so there’s a lot of watches that have been designed for this release. Graeme and I, we first met just over a year ago, and we looked at when we met Graeme has a background, he was the ex-managing director of The Swatch Group and you know, has a long history in watches and a love for watches which started when his father. Well, I could let you tell the story, maybe.
Graeme : Let’s part of this way Roy. We have a watch brands that is aimed at millennials, and the Swiss being aimed at maturing millennials. I’ve been interested in watches for 45 years, so you can work that one out. Basically, I’m born in the’ 60s I’ve been in love of watches for many years. I was fortunate enough that, born in Africa, hence this accent, immigrated to Australia been here 25 years, and I got the dream job in 2000. I ended up running Swatch when it was the official timekeeper keeper to the Sydney Olympics. Homegrown Olympics, unbelievable brand like Swatch, and I thought that was the be all and end all. But, it was corporate, big corporate, huge corporate. 18 months later, I became the managing director, the CEO of The Swatch Group, which for me it was like going to play school every day. I just have an innate love for watches, have loved watches my entire life.
Graeme : At the opposite end of the spectrum from Alex, who, millennial making non Swiss watches to an old fart like me who has been in the Swiss watch grind for 20-plus years, and the two of us got together, saw an opportunity in the industry, which was Alex was a little bit looking for the next wave, the next step. A lot of stuff coming out of China, a lot of non-design stuff coming out, a lot of low quality stuff coming out of China. A lot of stuff on Kickstarter that purported to be a luxury, that often used word, abused word I should say, but really it was just cheap garbage out of China and other countries that would all remain unnamed and even worse quality watches than China.
Graeme : We resonated in a conversation about Swiss made and wondered whether we could bring Swiss made to the maturing millennials at an entry process level. Alex was very interested in Swiss. He was unable to access it because, unlike China made watches where you could go on Alibaba, there’s no [Swillibaba 00:05:59], there’s no Swiss Alibaba equivalent, and the Swiss being very conservative, very old school, very relationship based, very closed, very guarded. You can only get in if you’ve been on the inside. Thankfully, I was on the inside for many, many years and I have many friends, a few enemies as well, you pick those up along the way. But, many, many friends in the industry who, when we spoke to them, were really engaged with the idea and really engaged with Alex being a millennial who’s prepaid to take Swiss watches into maturing millennial generation. For us, it was a mixture of old school Swiss, old school Graeme, and new age Alex and new age The Fifth. Put the two together, and we ended up where we are today with The Fifth Swiss.
Alex: Yeah, that’s basically it. It’s been a really exciting and interesting journey, and I think that’s part of the entrepreneurial journey, is always kind of looking for, what is the opportunity and where is the gap? And kind of looking at the business from Graeme’s skill set and my skill set and what I had with the existing business, we were able to kind of go, you know, full head of steam at this opportunity to bring Swiss made watches to a millennial generation.
Roy Morejon: Let’s talk about that evolution of 2014 setting it up and selling, you know, products, launching on the fifth, which I love as a tactic and a way to continually engage your audience in new launches. Now, fast forward five years later, you’re switching up, you know, production to Swiss manufacturing as well as building the brand to almost 200,000 likes on Facebook. Let’s talk about the evolution of where it kind of began and what now it’s evolved to based on consumer feedback.
Alex: For sure. I think that it’d be good for Graeme and I to both kind of approach this question because we’ll probably come at it from different angles. But, you know, for me, there was no millennial watch brand at the time that we started the business. There was a generation of people who could appreciate watches, but there wasn’t a brand for there them. It was too expensive for them. We came in and we offered beautiful designs at an affordable price. We got some really good early traction with the business, and that’s kind of where we established the model of selling on the fifth of every month. The demand would build up for what we had. We would release it and then we would do the same the next month.
Alex: We got some really good kind of engagement with that. It meant that for all the time that we weren’t selling, we could have a different relationship with the customer, which was really awesome. From there, we made a lot of moves as a business, which kind of took away from our core but it was part of us kind of growing as a business. You know, you take kind of a left foot and a right foot. You know, there’s no wrong foot, and it’s just kind of the evolution of us moving forward was to try a lot of things, see how our market, see how our customer accepted that thing that we released, and then adapt to it.
Alex: That’s where it kind of leads us to the next kind of challenge and the opportunity we’ve been working hard on for the last year, which is to bring Swiss made to life for the millennial generation. It’s something that isn’t done. There is no brand out there. We will be the first, the world’s first pure direct to consumer company to make Swiss made watches, which is a really exciting positioning for us. You know, it shows how difficult it has been to do, even though it makes sense that there is a generation of people out there who have low quality product, and quality that, when they could get better quality.
Alex: They could pay $50 more and have a really beautiful, beautifully designed, traditionally crafted page that has a history behind it and really talks to kind of who they are and what they stand for. That was really where we see the opportunity is to kind of step into a space where there is a generation of people looking for something better, looking for something that kind of matches their lifestyle as they kind of grow. That’s kind of where Graeme and I are really looking at the business and the opportunity that this bring.
Roy Morejon: Let’s talk a little bit about-
Graeme : Roy, I-
Roy Morejon: Go ahead.
Graeme : Sorry, carry on. I come from the traditional end of the market where you have the brand owner who then sells to a distributor who sells to a wholesaler who sells to a retailer, who then marks up by 100% or by 100% to get a 50% margin, sometimes more. They’ve got big retail overheads, big rents. We understand all that sort of crap. But, old school archaic legacy systems, which are okay for the really expensive top end brands because there’s enough money in it to be able to reduce the percentage margin and still for everyone to clip the ticket. However, when you get down to entry price, entry level watches, if we took our watches, which are made in a very well known in factory which has to remain confidential for a variety of reasons, the watch that would be selling for say $300 Australian would, if it went through the traditional channels would be close to $1,000, and it’s the same watch.
Graeme : When you looking at it and you go, we got a $1,000 watch that you’re buying for $300 not because we’ve cut back on the on the quality. The quality is the same because you work from the factory price up. It’s just that there aren’t all these additional people with their snouts in the trough taking bits and pieces. At the end of the day, people have said to us, “Oh, you know, you can’t point a finger at the retailers. It’s unfair because you guys are online.” I go, the challenge is this, is that, in our opinion, it’s not the fact that we’re online and a traditional bricks and mortar retailer like Zales in the US or Angus & Coote here and there are millions of them all over the world, have the disadvantage of being in retail with the overheads. If they gave great customer service and had the latest product all the time and moved with the market, it’d be difficult for us to [inaudible 00:12:40] the price advantage..
Graeme : However, with us, we’ve got a massive price advantage, and whatever’s available you can see in buying, get it shipped within a few days to your house. You get the convenience factor as well, so we see that with the rising brands sold throughout Amazon and direct to consumer brands throughout the world. Whereas, Swiss made have not been traditionally embracing of it because of the legacies [inaudible 00:13:08] that they have and the tens of thousands of retailers they’ve got on a worldwide basis. The challenge is, is how does brand X, I must make sure I don’t mention a brand, that would be unfair. How does brand X turn around and go direct to consumer, drop their price by 50% so that the factory still makes the same, and just cut out all their retailers if they got 4,000 retailers worldwide? It’s not something that can be done overnight. It would take 10 or 20 years, if at all.
Graeme : Sometimes, some of these big, big successful companies, as I’m sure you know if ever experienced the big companies, it’s a bit like turning the Titanic. They don’t turn easily. There’s entrenched thought processes, there’s entrenched management, entrenched overheads, and that just all ends up in a more expensive product for the end consumer. With us, we’ve got a handful of people that run this business because we run it very, very efficient, lean operation, because every time we add an extra head here, although it might not be expensive, it’s got to be translated into the cost of the product.
Graeme : We don’t want people paying for big fat cat salaries and big fat cat cars and fancy offices. Quite honestly, if you came to our offices you would look at it and go, “Seriously, this is where you operate from?” Because, we understand the value of money and that whatever we spend ends up being built into the cost of the product. We’re looking at it going, can we take but old traditional conservative historic country like Switzerland, which are known to make the best watches in the world, hands down, unrefuted since watchmaking began, and bring it to a new generation at a price that is not crazy expensive? That’s what we find ourselves doing.
Roy Morejon: I love that you’re talking about, in terms of the legacy of the business and how it was always launching a new product on the fifth of the month. What was the conversation internally to decide on using crowdfunding as a means to do the next launch?
Graeme : Roy, I tell you what and where it comes from, is that when Alex and I decided after being openminded Alex, to listen to an old bloke like myself and wanting to do Swiss, we then looked at the business itself and went, okay, we need to invest quite substantially in stock, one, because we want stock to service our customers, and two is a big investment, because an investment in a Swiss watch costs a hell of a lot more than a watch made in Asia. We looked at the risk mitigation because the greater the risk you’ve got, the greater the buffer you need to have, the margin of error, which means prices go up. We looked at a couple models, how we could look at manufacturing, so we sat with the guys in the factories or worked on what their MOQs were.
Graeme : Then, we’re looking around at the variety of ways in which we could strip out the risk and we came across Kickstarter and looked at it and went, well for us there’s a few things. One is, we don’t ever want to produce product that no one’s going to buy. A warehouse full of green watches that no one wants is a problem because we need to sell those watches. The best way for us to get a read for what the customer wants is to go on Kickstarter, show them the 75 watches, sorry, and if they hate 25 and only want 50, we won’t produce the other 25. We’re not caught up in our egos that we have to produce everything. We’ve gone through a very strict and rigorous process to design and to choose the watches. At the end of the day, we will only end up making those that our customers on Kickstarter tell us that they want. The rest, we are more than happy to junk.
Graeme : We hope and we believe that, out of the 75 that the majority should be successful because we started with 300. We have gone from 300 down to 75, so the selection process, the culling process has already happened. But, at the end of the day, Roy, if we find that there’s only 25 watches that people want and love those, the 25 that we will produce. We’re not clogging up the system, using up the Earth’s resources, hurting the planet, all that sort of stuff, shipping stuff all over the world to sit in a warehouse. It doesn’t make economic sense. It doesn’t make sense for neither consumers nor ourselves at the end of the day. For us, we just saw Kickstarter as being a really good way at mitigating the risk and not having to take a punt on what we wanted to produce without any idea outside of historic, gut feel, and instinct.
Roy Morejon: Yeah, and it’s beautiful way, right? To market test designs, demand, and style. Launching this many products and skews, certainly, it’s going to help in terms of the development and cost when you guys bring these products to market and ship to your community.
Alex: Definitely. I think it’s also a really interesting one, because we do have a successful brand already. We’ve got an existing customer base who loves what we do. For us, it is a departure from what our business is at the moment. As much as it is de-risking for the product, it’s also de-risking for the brand because we can try this campaign on a different platform. You know, we really believe in the opportunity, and when we’ve put everything into kind of making it, actualizing it, but you know, if people don’t want it, that’s okay. We’ve got an existing business and we’ve got a really happy, loyal customer base. For us, it was kind of taking a big pivotal kind of thing that we’re doing and trying it on a different platform, and that platform, after looking around and talking about the opportunity, Kickstarter just seemed right.
Roy Morejon: We talked a lot about on the show, the preparation and leading up to the Kickstarter launch. You know, I know today’s an exciting day where we’re about to hit the button and get this thing going, so talk a little bit about the prep work leading up to the Kickstarter campaign that may have been a little bit different than a typical launch that you’ve done previously.
Alex: That’s a funny one Roy, because our business has always worked on this kind of build up to release, and then a release. That’s kind of what we, we were very nontraditional, and I think that was part of our strength early days and it was our point of difference that made us really kind of edgy and willing to try different things. We first launched the business at 12:00 AM Australia time, and now, most of our customer base was in Australia. You know, we were always doing things a bit differently. You needed to get a passcode to the store, and all of our marketing efforts would happen throughout the month. Then, we would know when the campaign released and the hype was there and people were getting their products and they were really super excited about it, that we knew in the first few minutes whether we did a good job.
Alex: It’s kind of, in many respects we’ve been training for a platform like Kickstarter where it’s a big buildup, there’s a lot of anticipation for the release, and then we get to offer it. We’re really excited on Kickstarter because it’s helped us kind of put everything in line. You know? Focus to kind of a pivotal point, and just having even that movie piece, which I’m really excited to release and excited for people to see because it explains the journey and you get to see how many people actually are involved in making a watch, and all of that happening in Switzerland, which is really exciting. We’re really excited to kind of release that on Kickstarter. There’s not only the product for people to buy, but there’s the content for people to enjoy, and you know, we’re really excited for that. It’s been a big build-up. I think we’ve had 25,000 people sign up to the campaign, which was awesome. The interest has just been really great, so we’re really excited to release it.
Roy Morejon: Yeah, and we’re definitely excited over on this side as well. I know you’ve been working with our agency, Enventys Partners, for a while now. Just for our audience’s sake, what were some of the biggest considerations that you guys went through when considering what agency to partner with on this launch?
Graeme : Really, Roy, it’s something better answered by Blake. Unfortunately, you can’t get Blake. I’m looking at him through the window here, and he’s smiling at us and waving. He’s got a good hour or so before this thing goes live. In essence, we left it to Blake to go out to the market, and he’s head of our marketing, to go out to market and do some due diligence on a number of companies. What swung it for you guys? One is, the openness and decency and honesty and integrity. When it came to the question times, he never felt that when he was speaking with Reid that anything was being held back or was bullshitted about. It just seemed like you guys were, as we say in Australia, fit income. You were straight up.
Graeme : Also, at the end of the day, you have run some or been involved with some of the biggest and most successful Kickstarter campaigns in the history of Kickstarter. That’s a big benefit to us, a big plus. Also you had some really great success in being involved with some of the really most successful Kickstarter watch campaigns, which is right up our alley. Main thing is gut feel, we’re at the other end of the world. Speaking with Reid and your team just gave us a sense of comfort that you guys were the right people to get married to. That really was, once we then looked at all the attendant benefits, the fact that you been so successful in the past, been so successful with other watch campaigns, it, for us, was a no brainer.
Graeme : When I came out to see your team in May, June, I think it was, again, everything that we had had during the discussions was backed up face to face. A really friendly, really decent team who know what they’re doing. Especially so, when we’ve had a couple of hiccups towards the end now, just with regards to getting set up and bank accounts and overseas and it’s a bit of a distance, the [inaudible 00:23:31] of distance, and the 14 hour time difference. Early morning for you right now, but 11:00 PM for us. Things that are mitigating and working against us, and I got to say this much, your team have been exemplary. I mean, Emily Sawyer is, if she wants to come work in Australia, she’s got a job here, period. That’s how good they are. In essence, it was just the feeling from Blake that he received from Reid, and the fact that there was nothing to be hidden and it was upfront and truthful about every question we had asked, including some of the probing ones, they were answered with professionality and respect.
Roy Morejon: Well, I love hearing all that feedback, Graeme. I really do appreciate it. With that, this is going to get us into our launch round where I’m going to rapid fire a handful of questions. Alex, I believe you drew the short straw, so you good to go?
Alex: Yep, I’m ready.
Graeme : All right, so what inspired you to be an entrepreneur?
Alex: I really think that it was a lack of progression in my current job, and I had kind of gone as far as I had gone, and there was something that I was passionate about that was kind of a burning desire to do something inside of me, and it took me a while to actually figure that out, what that was. I originally started a design blog. I tried to sell products on that blog, and then those things didn’t work. Then I started a watch business. It was kind of a feeling that I had inside, and then I just kind of kept moving closer towards that feeling, which led to a successful business.
Roy Morejon: Alex, if you could meet any entrepreneur throughout history, who would you want to ski the Swiss Alps with?
Alex: Oh wow. Look, I’m reading some really, really good books at the moment, but you know, for a lot of successful entrepreneurs, and there’s some great ones out there, but probably Richard Branson takes it for me. He’s just got such good approach to the way he does business and a good attitude and a good hunger for living life to the fullest. Yeah, I really admire a lot of those traits.
Roy Morejon: What would be your first question for Sir Richard Branson?
Alex: My first question for him would be, what’s been the most pivotal point in his career? You know, I think that we all have moments where we have a feeling and we can kind of acknowledge those moments. I think in the entrepreneurial journey, you have epiphanies along the way where, you know, like coming to this opportunity, where we’re going at, it’s pretty ludicrous to try and take on the big Swiss made watch brands. It’s pretty silly, and it’s a lot of work and it’s a lot of investment. But, something in kind of Graeme and I meeting made us think that we could do it. There is that, you know, something I admire is that he’s ballsy and he’s willing to go after that opportunity. For me, I really would be interested to kind of understand what pivotal points in his career he can talk about, and then, how did things translate from there.
Roy Morejon: You mentioned you’ve been reading a few entrepreneurial books. Any that you would recommend to our listeners?
Alex: Well, I just handed Graeme Good to Great, but I’m also reading the, I’ve just read Shoe Dog, which is a great book and I’m reading the autobiography for UGG.
Roy Morejon: Nice. I think Shoe Dog is a book that every entrepreneur and startup founder definitely should read.
Roy Morejon: Where do you see yourself in five years?
Alex: Heli-skiing in Switzerland.
Roy Morejon: There we go.
Alex: No, you know, I’ve got a real taste for and real thirst for pushing the boundaries in kind of all areas. Yeah, anything extreme sports is me. But, you know, I’m really excited about this next journey of the business, you know, pushing somewhere where nobody else has gone before. That’s what excites me. That’s what makes it easy for us to jump on these calls at 11:00 at night, you know, night after night. It’s what kind of drives me and makes me passionate about what we’re doing here, is doing something that nobody else has done before.
Roy Morejon: We love that. Last question, Alex, and I know we haven’t launched the campaign yet, but I’ll ask anyway. What does the future of crowdfunding look like?
Alex: Wow. You know, I have to be honest, it’s not a question that I’ve given a lot of thought to. Throughout the journey of creating this campaign, I’ve loved that you can have an idea, you can have something that you’re passionate about and you can put that something out there and see if other people are passionate about it too. I think that we’re in the point where we’ve got our Facebook groups up and running for our release and we’re seeing 500 comments plus in those Facebook groups, and they’re all from people we have not met before. They’re people who are supporting our vision, and I think that crowdfunding is a really kind of great platform in the sense that you can put up an idea and you can have other people who have that need, who have that, who want to see that idea come to life. I think it’s a real, it’s an awesome platform for people to push their ideas and connect with people who might be into those ideas too. From my experience to date, Roy, it’s been really awesome. But, yeah, I’ll probably give you a much better answer after the campaign.
Roy Morejon: We look forward to interviewing both of you guys after that. With that, this gets us to the end, but this is your opportunity to give our audience your pitch, tell people what you’re all about, where people should go and why they should check you out.
Alex: For sure. Do you want to both take that, Graeme, or …
Graeme : No.
Alex: Coming into this, our goal is to connect traditional craftsmanship with contemporary culture. Meaning, the history, the beauty, the design, the world of Swiss made, and give that to millennial generation who are missing that. I think we’re in the day and age where it’s, you know, watches have lost their meaning in a little bit, that they’re now a fashion pace, but watches are so much more than that. The world of Swiss has so much history and so much beauty, and there’s so much storytelling, like, down to every tiny little detail of our watch, we’ve carefully crafted it. We’ve got a bespoke five sided crown that was inspired by Graeme’s and my connection over vintage Omegas. Graeme’s father actually won a vintage, an Omega Constellation Grand Luxe in a game of poker, which sparked Graeme’s love for watches. My dad had a vintage Omega too, which really influenced my love of Watchers.
Alex: There is a such a story in watches, there’s such a history. When people look down at their wrist, we want them to be reminded of that history. You know, there’s values that can drive people forward in life. They’re more than a fashion item. For us, it’s really connecting that beauty of an industry with contemporary culture, a millennial generation who haven’t had that before. That’s really our goal here, and you know, we’re really excited to launch that on Kickstarter and see how people respond to it, but the response so far has been really awesome.
Roy Morejon: Well Graeme and Alex, this has been awesome. Thank you so much audience for tuning in. Make sure to visit artofthekickstart.com for the notes, the transcript, links to the campaign and everything else we talked about today, and of course thank you to our crowdfunding podcast sponsors The Gadget Flow and BackerKit. Graeme and Alex, thank you so much for joining us today on Art of the Kickstart.
Alex: Thanks for having us.
Graeme : Thank you.
Roy Morejon: Thanks for tuning into another episode of Art of the Kickstart, the show about building a business, world, and life with crowdfunding. If you’ve enjoyed today’s episode, awesome. Make sure to visit artofthekickstart.com and tell us all about it. There, you’ll find additional information about episodes, our Kickstarter guide to crushing it, and of course if you loved this episode of lot, leave us a review at artofthekickstart.com/iTunes. It helps more inventors, entrepreneurs, and startups find this show and helps us get better guests to help you build a better business. If you need more hands on crowdfunding strategy advice, please feel free to request a quote on enventyspartners.com. Thanks again for tuning in, and we’ll see you again next week.